I. Field of the Invention
The invention relates to an administration system and method for directing payment for financial obligations, and more particularly, to a system and method for electronic payment for purchases using electronic communication.
II. Description of the Prior Art
It is known to make purchases from merchants electronically over the Internet using conventional credit cards. The consumer provides a credit card number to the merchant electronically. The merchant then seeks approval from the credit card company for payment for the purchase. If the consumer is within the credit limits of his account, the credit card company will give the merchant approval for payment and the merchant then completes the transaction with the consumer. The credit card company then pays the merchant and periodically issues a written statement seeking payment from the consumer.
However, there are security and privacy problems with such a system. Anyone having the consumer's credit card number can make a purchase so long as it is within the credit limit of the card. Additionally, conventional charge cards are obtained by using paper forms which often must be delivered by the postal service before a plastic charge card is delivered to the customer. The consumer does not receive notification of the credit transaction or payments to the account until the monthly statement is issued. Because of the multitude of steps and paper documentation required to complete a transaction using either a paper check or conventional charge card, financial institutions, customers and merchants all incur high costs for the convenience of using a check or credit card. Transaction summaries are provided only once a month, thereby creating a substantial time gap if a transaction has been improperly made or improperly entered into the system.
Thus, it would be desirable to have a payment system which is easily usable, secure and provides great flexibility in payment and additional security for the consumer. Additionally, it would be desirable to provide real-time notification of changes in the customers credit account.